Kodak Completes Acquisition of Creo Inc.
Eastman Kodak Company (NYSE: EK) today announced it
has completed its acquisition of Creo Inc., a premier supplier of prepress and
workflow systems used by commercial printers around the world. Creo’s
extensive solutions portfolio is now part of the Graphic Solutions &
Services (GS&S) operating unit within Kodak’s Graphic Communications
Group (GCG).
An important milestone in Kodak’s digitally
oriented growth strategy, the acquisition of Creo uniquely positions Kodak to be
the preferred partner for its customers, helping them improve efficiency, expand
their offerings and grow their businesses.
In
a transaction valued at approximately US$988 million, Kodak paid US$16.50 per
share for all the outstanding shares of Creo, or approximately US$954 million.
The value of the transaction also includes Creo’s payment of approximately
US$34 million for the cancellation of options prior to the close. For 2005, the
acquisition is expected to be modestly dilutive to operational earnings. Kodak
expects the acquisition to add approximately $.05 per share to operational
earnings in 2006 and to add approximately $700 million in
revenue.
Kodak used its bank lines to
initially fund the acquisition, with a portion of this debt to be refinanced in
the capital markets at a future date.
“The inclusion of Creo -- its solutions and its people -- into Kodak marks
another significant milestone in our journey to become the global leader in
graphic communications,” said James Langley, President, Graphic
Communications Group, and Senior Vice President, Eastman Kodak Company.
“The addition of a complementary portfolio of leading computer-to-plate
equipment, workflow software, prepress, proofing, digital plates, scanning and
image capture solutions, in addition to the highly talented Creo team, will make
Kodak a stronger partner for our
customers.”
Creo and GCG
Integration
With the acquisition complete,
Creo’s operations will be included in the GS&S portfolio. Judi Hess,
formerly President, Creo, has joined Kodak and will lead the Workflow &
Prepress strategic product group as General Manager and Vice President. Hess
will remain based in Vancouver, B.C., which will serve as GCG’s center for
prepress and workflow applications. She reports to Jeff Jacobson, Chief
Operating Officer, Graphic Communications Group, and President, Graphic
Solutions & Services.
Several other senior
Creo managers will join Kodak now that the acquisition is complete,
including:
· Dan Gelbart is joining Kodak
as a Senior Research Fellow and special advisor to Jim
Langley.
· Israel Sandler is Managing
Director, Europe, Africa and Middle East Region
(EAMER).
· Garron Helman is Managing
Director, Greater Asia Region (GAR).
“Since the completion of the acquisition of Kodak Polychrome Graphics
(KPG) in April, we have made tremendous progress on integration,” said
Jacobson. “We’ve put a new organizational structure in place, named
a strong leadership team, and increased collaboration in sales and service. The
completion of the Creo acquisition will only accelerate our integration
activities, and allow us to achieve synergies and to offer our customers more
and better solutions to help them grow their
businesses.”
About Eastman Kodak
Company
Kodak is the leader in helping people
take, share, print and view images – for memories, for information, for
entertainment. With sales of $13.5 billion in 2004, the company is committed to
a digitally oriented growth strategy focused on the following businesses: Health
- supplying the healthcare industry with traditional and digital image capture
and output products and services; Graphic Communications - offering on-demand
color and black and white printing, wide-format inkjet printing, high-speed,
high-volume continuous inkjet printing, as well as document scanning, output and
storage products and services; Digital & Film Imaging Systems - providing
consumers, professionals and cinematographers with digital and traditional
products and services; and Display & Components - which designs and
manufactures state-of-the-art organic light-emitting diode displays as well as
other specialty materials, and delivers imaging sensors to original equipment
manufacturers. More information about Kodak (NYSE: EK) is available at
www.kodak.com.
#
Certain statements in this press release may
be forward looking in nature, or "forward-looking statements" as defined in the
United States Private Securities Litigation Reform Act of 1995. For example,
references to Creo’s projected revenues and the impact on Kodak’s
revenues and earnings and Kodak’s cash generation plans are forward
looking statements.
Actual results may differ
materially from those expressed or implied in forward-looking statements. In
addition, any forward-looking statements represent our estimates only as of the
date they are made, and should not be relied upon as representing Kodak’s
estimates as of any subsequent date. While Kodak may elect to update
forward-looking statements at some point in the future, it specifically
disclaims any obligation to do so, even if its estimates
change.
Kodak’s results may be
adversely affected if it is unable to realize the expected benefits of the
acquisition of Creo, including because of:
· Difficulty in combining the operations of Creo with those of Kodak,
resulting in failure to achieve the projected cost savings, synergies,
efficiencies and revenue growth, and
·
Any loss of employees, customers or suppliers that Creo or Kodak may suffer as a
result of the acquisition.
The
forward-looking statements contained in this news release are subject to a
number of factors and uncertainties, including Kodak’s successful:
· Implementation of its digitally
oriented growth strategy, including the related implementation of our three-year
cost reduction program;
· Implementation
of product strategies (including category expansion, digitization, organic light
emitting diode (OLED) displays, and digital products);
· Implementation of intellectual
property licensing strategies;
·
Development and implementation of e-commerce strategies;
· Completion of information systems
upgrades, including SAP, our enterprise system software;
· Integration of newly acquired
businesses;
· Completion of various
portfolio actions;
· Transition from
analog to digital imaging;
· Reduction of
inventories;
· Implementation of its
debt management program;
· Improvement in
manufacturing productivity and techniques;
· Improvement in receivables performance;
· Reduction in capital expenditures;
· Improvement in supply chain
efficiency;
· Implementation of future
focused cost reductions, including personnel reductions;
and
· Development of its business in
emerging markets like China, India, Brazil, Mexico and Russia.
Forward-looking statements contained in
this new release are subject to the following additional Kodak risk factors and
uncertainties:
· Inherent
unpredictability of currency fluctuations and raw material costs;
· Competitive actions, including
pricing;
· The nature and pace of
technology evolution, including the analog-to-digital transition;
· Continuing customer consolidation and
buying power;
· Current and future
proposed changes to tax laws, as well as other factors which could adversely
impact Kodak’s effective tax rate in the future;
· General economic, business,
geopolitical, regulatory and public health
conditions;
· Market growth predictions,
and
· Other factors and uncertainties
disclosed from time to time in Kodak’s filings with the Securities and
Exchange Commission.
Any forward-looking
statements in this press release should be evaluated in light of these important
factors and uncertainties.
Posted: Wed - June 15, 2005 at 07:47 PM